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Don&#39t get caught in the web

This year will see ever more IFAs and financial services businesses

creating websites and that is a good thing. But they will also be venturing

into a world of security risks, data protection responsibility, copyright

and intellectual property issues, with risks of seeing their own material

stolen or misused or of inadvertently misusing somebody else&#39s material.

Even reproducing an article like this on a website to illustrate a point

may result in an infringement of either the author&#39s (as originator of the

material) or the publisher&#39s copyright, or both. Because websites are

accessible, there is a high level of probability that any such material

will, sooner or later, be found by its rightful owner. So if material is to

be used, the copyright owner needs to be identified and asked.

But there is an even more serious risk in the other direction – that of

having material or data stolen from a website. It is not specifically a

financial services issue but, given the nature of financial services and

the type of client-relationship information held, there is a serious risk

to which financial services businesses, especially small ones, are uniquely


To an increasing extent, the things on which we place value are

intangible, known collectively as intellectual property. In the context of

an adviser, it may be the way advice is couched, the wording of a specific

idea or the method of achieving a particular end. Because intellectual

property is easy to copy, various protections have been devised.

Creative work can be copyrighted by simply appending the internationally

recognised © symbol to original work while designs and formulae can be

patented and corporate identifiers can be trademarked with the ® or 

symbols following registration in a suitable jurisdiction.

Of course, some ideas or forms of words cannot be copyrighted and, while

those controls may have worked well enough in the past, e-commerce has

brought a whole new range of risks and possibilities to these issues.

What cannot be copyrighted but should be protected is any client-related

material for commercial reasons and because the holder of the information

is directly responsible for its safe-keeping under the 1998 Data Protection

Act which includes a range of penalties up to imprisonment for directors of

transgressing companies.

All data controllers must now register and all automated processing will

need to be compliant by the end of 2001. The 1998 Data Protection Act

establishes clear standards for what data is held and how it is kept and

processed. This extends to information gathered from people visiting a

website. All website owners and operators need to be clearly aware of the

implications of this for their own business.

Companies with marketing databases will have to seek permission to

maintain names on the database and must regularly check against the mail

and telephone preference services files to avoid unwanted contacts. One

massive change will be that the 1998 Act covers data held in manual or

paper systems so will entail a full vetting of every card in the card file

to ensure full compliance at all levels.

Furthermore, the internet, through the worldwide web, offers businesses of

all sizes the ability to project themselves around the world. However, to

do so means placing significant intellectual property into a digital format

from which it is relatively straightforward to capture and copy

information. This raises a number of issues.

Internet businesses and users can present an easy target. The real risk is

from hackers with criminal intent who aim to steal money or information for

selling on to a third party. Able to strike from any country they choose,

hackers are hard to track down and apprehend. Financial services sites are

likely to be targeted exactly because of the type of information they hold

about clients and prospects. With such a situation, the sensible thing is

to protect the business against attack in the first place.

The easiest security is housing the website separately from the main

systems and placing between the two a firewall computer. Only visitors with

the correct passwords will be allowed past the firewall into the main

system. For additional security, passwords can be encrypted using software

that creates a unique code when the password is first entered and shares

the coded version of the password only with the user&#39s computer and the web


There is also a risk of counterfeiting or piracy. This can extend from the

theft of written material to the counterfeiting a website itself in order

to trick innocent “customers” into transmitting their financial or personal

details to the false site, from where the information can be applied for

illegitimate purposes.

Digitally stored material can be stolen with no loss of quality. For those

who wish to, it is also becoming easier to copy software from a site. And

the presence on the web of trademarked material in portable formats makes

it easy to download and copy trademarked elements for use elsewhere.

The problem is that not only does the criminal use copyright and

trademarked material to hoax genuine customers but also the genuine owner

of the material will get the blame for any subsequent losses even if only

because the customer will believe that security should have been tighter.

Two forms of protection are being developed to counter the threat of cyber

forgery and piracy. The first involves software to protect material from

being copied or to make it unusable if copied. Files and images put on to

the web can be “watermarked” by Electronic Copyright Management Systems in

a manner that will clearly show their origins at all times and will enable

legitimate owners to track down their copyright and trademarked material

wherever it is used on the web through a process similar to a web search.

Watermarking will even work where one sentence has been copied from a

document. Material can also be encrypted to make it indecipherable if

intercepted during transmission. Bigger files can be secured into virtual

envelopes allowing transmission and viewing with restrictions but no

copying without a further unlocking code.

The other protection is legal. This is patchy at present, with a number of

states refusing to sign treaties that will hinder their own counterfeit and

piracy industries. But international pressure and an increasing ability to

identify and isolate criminal sites are extending the reach of copyright

and intellectual property law.

National governments offer protection within their own jurisdictions and

the European Commission with the Council of Europe has embarked upon

programmes to protect intellectual property on the web within the EU. On a

global scale, the World Intellectual Property Organisation has laid down

international standards. But there are a number of hurdles still to be

cleared. In order for the various layers of legislation – global,

continental and national – to work, they must be harmonised and that will

take time. Also, if an infringement of intellectual property rights is

tracked down, the legitimate owner currently has to take action in the

country where the stolen property is found, usually one of the

non-signatory states.

All this may seem a million miles from the priorities of financial

services but only the reckless or Luddites will run the risk of ignoring

e-commerce security and intellectual property issues. It may cost them dear

in lost ideas, irate clients whose details have been taken and misapplied

or litigious owners of material they have used.


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